EXECUTIVE SUMMARY

Background Poverty and inequality have been recurrent challenges in the Philippines and
have again come to the fore in the wake of the current global financial crisis and rising food,
fuel, and commodity prices experienced in 2008. The proportion of households living below
the official poverty line has declined very slowly and unevenly in the past four decades, and
poverty reduction has been much slower than in neighboring countries such as the People’s
Republic of China (PRC), Indonesia, Thailand, and Viet Nam. The growth of the economy
has been characterized by boom and bust cycles and current episodes of moderate economic
expansion have had limited impact on poverty reduction. Other reasons for the relatively
moderate poverty decline include the high rate of inequality across income brackets,
regions, and sectors; and unmanaged population growth. This study aims to provide a
comprehensive analysis of the causes of poverty in the Philippines and give
recommendations for accelerating poverty reduction through sustained and more inclusive
growth. The study will provide an overview of the current status of government responses,
strategies, and achievements and will identify and prioritize future needs and
interventions. Millennium Development Goal (MDG) accomplishments to date will also be
assessed. It will examine implications of the current financial crisis on poverty and
recommend ways to move forward. The study is based on analytical work using current
literature and the latest available data, including the 2006 Family Income and Expenditure
Survey (FIES). Current Profile of Poverty in the Country Poverty incidence among
households increased from 24.4% in 2003 to 26.9% in 2006 and the number of poor families
increased from 4.0 million in 2003 to 4.7 million in 2006. The headcount index increased
from 30.0% in 2003 to 32.9% in 2006 and the number of poor people increased from 23.8
million in 2003 to 27.6 million in 2006. It should also be noted that poverty incidence and
magnitude do not necessarily coincide. According to the 2006 poverty data, Mindanao has
the highest poverty incidence at 38.8% but Luzon has the highest number of poor families,
with almost 2 million families (42.4% of the total). Self-rated poverty1 has ranged from
50% to 52% for most of 2008, peaking at 59% (an estimated 10.6 million people) in the
second quarter. Inequality has also been persistent over the years. Although the Gini
coefficient2 improved to 0.4580 in 2006 from 0.4605 in 2003 and 0.4872 in 2000, the level of
inequality remains high compared with other countries in Asia and 1 An approach
measuring poverty incidence through a random survey of households (heads) that identify
themselves as poor; in the Philippines, this was pioneered by the Social Weather Stations. 2
The Gini coefficient is the most commonly used measure of inequality. The coefficient varies
between 0, which reflects complete equality, and 1, which indicates complete inequality
(one person has all the income or consumption, all others have none). 2 Poverty in the
Philippines: Causes, Constraints, and Opportunities has hardly changed for more than 20
years. High inequality has limited the impact of economic growth on poverty reduction. The
Philippines’ midterm progress report on the MDGs shows that the following gains have
been made: (i) decrease in the proportion of people living in extreme poverty; (ii) visible
improvements in household and population poverty indicators; (iii) maintained net
enrollment rates by sex at both elementary and primary education levels; (iv) reduction in
infant deaths per 1,000 live births; (v) prevalence of HIV/AIDS below the national target of
1% of the population; (vi) improvements in environmental protection; and (vii) active
participation in the World Trade Organization. However, the Philippines is still lagging
behind in meeting the targets on access to primary education, maternal mortality rates,
and access to reproductive health care. Because of the current global economic crisis and
recent increases in poverty incidence, the goal of reducing the proportion of people living in
extreme poverty may not be achieved. In all goals and targets, existing indicators exhibit
significant disparity by region. In terms of gender, the Philippines has made substantial
progress in enhancing the opportunities and welfare of its women and men (ADB et al.
2008); however, challenges remain in implementing key policies and improving maternal
health and reproductive health care. The main characteristics of the poor include the
following: The majority live in rural areas and work in the agriculture sector, mostly as
farmers and fishers. In the urban areas, such as Metro Manila, they are found in slums and
the informal sector. They have large families (six members or more). In two-thirds of poor
families, the head of household has only an elementary education or below. They have no or
few assets and minimal access to credit.

Key Recommendations

Immediate and Short Term: Enhance Poverty Framework and Strategy There is a need to
enhance government’s strategy and to involve key sectors for a collective and coordinated
response to poverty. This would entail the following: 1. Revisiting the poverty framework to
address vulnerability to poverty and shocks. This should be formulated in a national social
protection strategy. The framework and strategy should also tackle chronic poverty and
pathways out of a poverty trap, and give serious attention to population management. 2.
Reforming institutions that coordinate poverty policy and implement poverty programs to
enhance coordination, improve efficiency, and reduce corruption; for example a. revising the
memorandum of agreement between the National Anti-Poverty Commission (NAPC) and
the National Economic and Development Authority (NEDA) to clarify the coordination roles
of each agency; b. incorporating the specific roles of agencies and key stakeholders at
various levels of intervention into a new poverty framework and plan of action; c.
continuing to reform the educational system (through the Basic Education Sector Reform
Agenda), the health system (through Fourmula One) and the social welfare system; d.
engaging nongovernment organizations and civil society sectors to monitor the delivery of
poverty programs and social services; e. mapping key stakeholders and their roles in
poverty alleviation at all levels of governance; f. examining the political economy of poverty
programs before implementation; and g. strengthening safeguards and mechanisms against
leakage and corruption in large poverty programs (such as, for example, the Department of
Education’s textbook watch and other civil society watchdogs). 3. Considering specific
regional and local characteristics (e.g., risks for disaster or conflict) in poverty program
interventions. Interventions should also take into account factors affecting intraregional
inequality, which would imply equalizing access to quality health, education, and
infrastructure services within regions (Balisacan 2003). 4. Facilitating better coordination
among government agencies and key stakeholders (e.g., nongovernment organizations and
corporations) to promote complementary action in specific localities and communities—from
targeting to program implementation to monitoring and evaluation. 5. Allocating from the
budget and raising more funds from civil society, religious organizations, business, and
bilateral and multilateral agencies to address poverty, vulnerability, and inequality. 6.
Improving poverty targeting and monitoring and evaluation, especially in local government,
with increased funds for data collection, processing, and management: a. The national
government must assist local governments in increasing their capacity for targeting and
monitoring (e.g., community-based monitoring system) through funding and training
initiatives designed for Executive Summary 5 poor areas identified by nationwide
household surveys. b. There should be coordinated efforts to integrate databases and
establish a sound targeting system at the local levels, such as the Department of Social
Welfare and Development’s National Household Targeting System for Poverty Reduction
and the community-based monitoring system mandated by NEDA, NAPC, and the
Department of the Interior and Local Government (DILG). c. Funding for the National
Statistical Coordination Board (NSCB) and the National Statistics Office (NSO) must be
sufficiently increased to provide an updated database for targeting e.g., the small-area
estimates determining poverty incidence at the municipal levels. d. Administrative data on
social indicators must be assessed and further integrated to provide alternative sources of
information.

SUMMARY OF KEY FINDINGS

AND RECOMMENDATIONS

Key Finding 1. Economic growth did not translate into poverty reduction in recent years.
While the country experienced moderate economic growth in recent years, poverty
reduction has been slow. The quality of growth matters and persistent inequality mitigates
the positive impact of growth on poverty reduction. Chronic poverty is a concern, and
poverty has become a major constraint on the attainment of high levels of sustained growth
and the overall development of the country. The solution to poverty is thus of public
interest. Benefits will not only accrue to those who get out of poverty but also to society as
at large. 2. Poverty levels vary greatly by regions. There are regions where poverty
incidence has been persistently high (Autonomous Region in Muslim Mindanao, Caraga,
Region IV-B, Region V, and Region IX). Regions with the most poor people include Regions
V, VI, VII and IV-A. The rates of poverty reduction also vary widely across regions. 3.
Poverty remains a mainly rural phenomenon though urban poverty is on the rise. The
majority of the poor are still found in rural areas and in the agriculture sector. They are
mostly farmers and fishers. However, there is an increasing number of poor households in
urban areas, typically found in the informal sector. 4. Poverty levels are strongly linked to
educational attainment. The heads of two of three poor households have only reached
elementary education and below. 5. The poor have large families, with six or more
members. Population management will be critical for an effective poverty reduction
strategy. 6. Many Filipino households remain vulnerable to shocks and risks. This is
highlighted by the escalating conflict in Mindanao and the current global financial crisis.
An effective poverty strategy must incorporate social protection. 7. Governance and
institutional constraints remain in the poverty response. Measures to improve this must be
an important focus of attention in formulating a revised government strategy. 8. There is
weak local government capacity for implementing poverty reduction programs. Effective
delivery of basic social services and poverty-related programs at the local levels will hasten
poverty eradication. 9. Deficient targeting in various poverty programs. This is often
related to unreliable, inaccurate, and untimely poverty information, especially at the local
level, and partly due to poor governance in terms of program design and implementation.
80 Poverty in the Philippines: Causes, Constraints, and Opportunities 10. There are serious
resource gaps for poverty reduction and the attainment of the MDGs by 2015. A collective
approach to resource mobilization should be undertaken. 11. Multidimensional responses to
poverty reduction are needed. The poverty problem is multidimensional, and thus the
response should be multiagency and multisector and involve multiple stakeholders.
Convergence has been the right approach and this must continue to be practiced more
effectively. 12. Further research on chronic poverty is needed. There are very few micro
studies that examine chronic poverty and how the poor escape poverty traps. These studies
are important in the formulation of more effective policies and programs.

CONCLUSION

Poverty in the Philippines is experienced nationwide among the group of urban and rural
people, poverty is never been out of the main problem in our societyand on our daily lives. If
we are going to review all of our investigation and datacollections it is undeniable that the
poor getting poor and there is no vivid reason whywe encounter this. If were just let our
eyes wide open with our heart and mind thatare willing to understand we can see the
itinerant peddlers and sidewalk vendors whocarry their waves around. It is very rampant
and very pathetic, along with their semi-static hawkers in semi fixed locations who stay
along pavements and sidewalk andwho clip their waves on the wall and static hawkers in
more or less permanentlocations in kiosks around market places, sidewalks and empty lots.
Beyond thiscircumstances we can also see those children trying to sell cigarettes or wipe
our feetwhen we ride on in a public transportation, the family that sleep in the street,
thevictims of poverty that became a master in street eventually end up dead in their
ownexistence.But why are we experiencing lack of financial assistance and lack of
materialor basic needs? For us it is like a cycle it first started in corruption where in it
affectsour basic needs in life. It kills our rights and chances of better living. It pulls us
awayfrom our dream. Corruption has a huge impact on the poor and on poverty reduction.It
processes has now been reasonably widely discussed. So, in addition to thenegative impact
of corruption, there is also an element of disproportional.

A lot of people are now saying that it’s hard for them to survive a day and they all blame it
to thegovernment. At present our government is facing a lot of anomalies and controversies
and because of this the people especially those who are experiencing poverty right now
aresaying that Philippines won’t solve its problem as long as the corrupt officials remain
seatedon their position.There are several causes of poverty, some of these are lack of
education, corruption,depletion of natural resources, population growth, lack of job
opportunities, lack of government support, lack of investment, laziness of the citizens and
lack of discipline andmany other reason .a

nd inequality.

The general recession and the contraction in the labor market in the crisis of todayworld
causes declining labor productivity and rising underemployment, which hurt the poor hard.
Poverty can also be observed in terms of malnutrition, lack of education, low lifeexpectancy,
high child mortality and substandard housing. Poverty is highly correlated
withlandlessness .Most of the destitute mix many different ways of earning a living.

The use of the term minimum highlights the limitations of the governmentdefinition of
poverty. The government considers only minimum survival standards tomeasure poverty,
thus capturing only those who are desperately poor and cannot meeteven their most basic
needs. But those individuals and families who fail to meetdecent living standards should
also be considered poor. For example, a family withone or two minimum wage earners
whose income fail to meet their needs are also poor, even if their income is above
government’s poverty line.

In the Philippines, the range of the number of families living in poverty has beenwidening
and the entire range itself has been increasing. Being poor means experiencing alow quality
of life deprived of both the material and non material requirement that allow anindividual
to live like a human being.